The startup studio: A new model for driving innovation

What benefits can a large company derive from an innovation strategy? Is it a fad, an opportunity or a necessity? And, what do we really mean by innovation?

Digital has changed everything

At the dawn of the third industrial revolution as described by Jeremy Rifkin^[1], we can observe how digitalization is changing everything based on two key trends:

• Increasing emergence of new digital technologies
• Speed of their adoption (or disappearance)

Certainly, in our discussions with our clients—including comprehensive in-person interviews we conduct each year with 1,000 business and IT leaders—we see that digital technology has evolved from an enabler to a driver of change. (See CGI Global 1000 outlook)

Digital transformation has become vital for nearly all industries—and our clients are seeking our help to accelerate their digital transformation. But, how much digitalization is truly transformational, at least in the short- to medium-term?

The missing link: Innovation

Innovation is key to succeeding at digital transformation. It fuels the development of solutions that drive and accelerate digitalization, enabling organizations to achieve their goals faster and with less risk. It turns ideas into outcomes through proofs of concept and demos that lead to the best solutions for addressing an organization’s specific digital transformation challenges.

Unlike startups, large companies have access to significant investment funds and large pools of talent to help drive innovation. However, they often lack the creative capabilities of a startup—capabilities that enable startups to start small and grow quickly with their market and customers. In light of these strengths and weaknesses, what approach to innovation should a large company take?

Dean Leffingwell proposes an agile-type approach based on his scaled agile framework (SAFe) method while Éric Ries recommends a lean startup method described in his best-selling book. ^[2] Several studies on partnerships between large companies and startups also provide answers based on best practices observed when these two unique worlds come together. Looking more closely, a new innovation model emerges from all of these concepts—the startup studio.

The startup studio model is based on some simple principles, including the following:

• Creation of a simplified operating space that serves as a "free zone" or "island of freedom"
• Rules that foster creativity and intrapreneurship with a right to trial, error and failure
• Monitoring and performance indicators
• “Advisory board” composed of investment managers who will act as a venture capitalists with renewed financing based on results
• Formalized innovation life cycle, including team creation, first 100 days, realization of a prototype followed by a minimum viable product, additional iterations as required, etc.
• Integrated HR management to identify leaders and contributors, oversee skilling and reskilling, drive recruitment, etc.
• Development of scenarios for integrating solutions into the existing portfolio of products and services of the company

The introduction of this type of innovation model is increasingly of interest to large companies. However, implementation requires a strong commitment from top management and effective communication. Both are necessary to explain to the entire company the benefits of such an approach and why its “rules of the game” differ from business as usual. In addition to driving innovation, this approach can generate many other positive effects for a company: higher employee engagement (motivation, loyalty), more effective recruiting, optimization of partnerships, etc.

A case in point is CGI’s own innovation program—the Innovation, Creativity and Experimentation program. As a large company ourselves, we have adopted these principles. The program helps us to harness, generate, access and fund innovation. From an ideation portal to strong local and global innovation champions to proofs of concept, we have created 40 new digital solutions directly aligned with our clients’ digital transformation needs.

As the urgency to digitalize increases across industries, an effective innovation model is becoming more of a must-have, rather than a nice-to-have. The startup studio is a viable solution for large companies looking to up their innovation game. If you’d like to discuss the attributes and benefits of this model further, feel free to contact me.

[1] Rifkin, Jeremy, The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, & the Eclipse of Capitalism, 2014.

[2] Ries, Eric, The Lean Startup, 2011.